Social Security Crisis?
I don't know whether it warrants the "crisis" moniker (to me, government is always in a disastrous state), but Social Security is indeed facing an enormous cash flow shortfall in just a few years. Those who use bogus government accounting to say that there is no problem until 2042 are either disingenuous or delusional. People making this argument are saying that yes, cash flow will be negative, but those negative cash flows will come out of the huge Social Security trust fund, which won't be depleted until 2042.
Um, the only problem with this is that... there is no Social Security trust fund. I mean yes, there is such a thing on paper with a large number next to it, but there is no actual pool of cash or investments to draw on. The "trust fund" is full of government IOU's to itself - the actual cash was spent for general budget needs over the years. As a result, in just a few years, Social Security will require:
- Massive new taxes
- Large benefits cuts
- A complete restructuring of all parts of the program
- More government borrowing
Good post at Assymetrical Information goes into it in more depth.
